Consumer Protection

Act
“The interest of the consumer has to be kept in the forefront and the
prime consideration that an essential commodity ought to be made
available to the common man at a fair price must rank in priority over
every other consideration.”

Y.V. Chandrachud, J. in Prag Ice & Oil Mills v. Union of India, (1978) 3
SCC 459
Role of the UN
• United Nations submitted draft guidelines for consumer protection to
the Economic and Social Counsel (UNESCO) in 1983.
• General Assembly of the United Nations adopted the guidelines for
consumer protection by consensus on 9th April, 1985 (General
Assembly Resolution No. 39/248)
• In pursuance of the above Resolution of the United Nations, in the
following year, i.e., in 1986, Indian Parliament enacted the Consumer
Protection Act, 1986.
• The Act intended to provide for the better protection of the interest of
consumers and for that purpose provides for establishment of
Consumer Councils and other authorities for the settlement of
consumer disputes.
Background
• Each one of us a ‘consumer’ from the day we are born
• Variety of consumer goods to cater to the many needs
• Host of services available to the consumers like insurance, transport,
electricity, housing, entertainment, finance, banking, etc.
• A well organized sector of manufacturers and traders with better
knowledge of markets
• Purchaser not as knowledgeable about the product as he is expected
to be.
• Impact of advertisements, some of them misleading
• From Caveat Emptor (responsibility on the buyer) to Caveat Venditor
(responsibility on the seller)
The Indian Consumer
• Granting rights meaningless if the consumers are not aware of them.
• Apart from awareness, the extent to which the Indian consumer is
willing to assert his rights is also doubtful.
• Large majority of cases are filed and defended by lawyers.
• Indicative of the consumers’ lack of confidence.
• This is despite the fact that the procedure established by the Act is
simple, easily understandable and cost-effective.
Salient features
• The Legislation allows consumers to file their complaints themselves.
• They don’t require any lawyer.
• If the consumer is not sure about the process then he can take the
help of lawyers.
• The only requirement is that he has to file three copies of complaints
within the local jurisdiction where the damage occurred.
• At the same time he has to prove the product was defective or that
the service was not according to the standard that was promised.
Indian Contract Act, 1972
• They lay down the conditions in which the parties promise each other of
the services to be provided and agree on certain terms.The contract is
made that is binding on each other.
• They protect the interest that the contract is not breached and in case if
breached the remuneration to be provided.
The Sales of Good Act, 1930
• To ensure the consumer rights in case the goods offered to the consumer
is not up to the standard which was promised and the false claim was
made.
The Essential Commodities Act, 1955
• To keep track of the commodities which are essential and monitor
their production and supply. Also keep a track of any hoarders, black
marketers,
The Agricultural Produce (Grading and Marking ) Act, 1937
• To implement the grading standard and hence monitoring the same
whether standard checks are been done to issue the grading. In this,
AGMARK is the standard introduced for agricultural goods.
The Prevention of Food Adulteration Act, 1954
• This act makes sure the purity of the food items and the health of the consumers
which could be affected by the adulterated items.
The Standards of Weights and Measures Act, 1976
• The Standards of Weights and Measures Act protects the right against the goods
which is underweight or under measured.
The Trade Marks Act, 1999
• This act protects users from false marks which could mislead the consumer and
hence cheat them in the ground of quality of the product.
The Competition Act, 2002
• The Competition Act replaced from the Monopolies and the Restrictive Trade
Practices Act following to take action against the firms which use such practice
which in turn affect the competition in the market.
The Bureau of Indian Standards Act, 1986
• The Bureau of Indian Standards Act ensures about the quality of the product to be
used by the consumer and have introduced BIS Mark to certify the quality of the
product and have set up grievance cell which can take complaints regarding the
quality of the product.
• The Consumer Protection Act, 1986
Consumer Protection Act 2019
The 2019 Act varies from the 1986 in multiple ways
• Widening the scope by dealing with three more unfair trade practices,
• E-commerce,
• Product liability,
• Unfair Contracts;
• Introducing a new regulatory body named Central Consumer
Protection Authority
• Making the already existing penalties more stricter.
Consumer Protection Act 2019
• Preamble - “An Act to provide for protection of the interests of
consumers and for the said purpose, to establish authorities for timely
and effective administration and settlement of consumers’ disputes
and for matters connected therewith or incidental thereto”
• The Act widens the scope of consumer rights and covers the field of e-
commerce, direct selling, tele-shopping and other multi levels of
marketing in the age of digitization.
• The provisions of this Act shall be in addition to and not in derogation of
the provisions of any other law for the time being in force.
• The Act came into force on 20th July 2020. This act aims at revamping
the settlement and administration process by imposing stricter
penalties.
What CPA 2019 aims at
Timely and effective administration and settlement of consumer
disputes with ways and means to solve the consumer grievances
speedily
• All e-commerce transactions covered
• product liability provisions
• Central Consumer Protection Authority
• Prohibition and Penalties for misleading advertisements
• Establishment of Consumer Disputes Redressal Commission
• Provision for Alternate Dispute Resolution
• E-Filing of Complaints
Benefits to Consumers
• Deterrent punishment to check misleading advertisements and
adulteration of products
• Product liability provision to deter manufacturers and service
providers from delivering defective products or deficient services
• Ease of approaching Consumer Commissions and Simplification of
adjudication process
• Scope for early disposal of cases through mediation
• Provision for rules for new age consumer issues: e-commerce and
Direct selling
Benefits to Consumers
• The Act widens the scope of protection regarding the rights and interests of consumers.
Unfair contracts: includes contracts requiring excessive security deposits to be given by the
consumer for the performance of contractual obligations, and enable the consumer to file
complaints in such cases and would also keep the fraudulent businesses in check.
Territorial jurisdiction: The Act enables the consumers to file complaints where the
complainant resides or personally works for gain, benefit the consumers in seeking redressal
for their grievances when their rights have been violated.
False and misleading advertisements: lays down strict penalties for such acts or omissions.
Product liability: defines duty of the product manufacturer, service provider or seller to
compensate for any harm caused to a consumer by such defective product manufactured or
service provided to the consumer.
Mediation and ADR: Consumer can opt for mediation and ADR for speedy and effective
settlement of consumer disputes.
E-filing of complaints: Facilitates e-filling of the complaints and seeking video conference
hearings by the Commission.
• direct selling means marketing, distribution and sale of goods or
provision of services through a network of sellers, other than through
a permanent retail location;
• e-commerce means buying or selling of goods or services including
digital products over digital or electronic network;
• electronic service provider means a person who provides
technologies or processes to enable a product seller to engage in
advertising or selling goods or services to a consumer and includes
any online market place or online auction sites;
• unfair trade practices
• Restrictive trade practices
Product Liability
A manufacturer or product service provider or product seller to be
responsible to compensate for injury or damage caused by defective
product or deficiency in services
Basis for product liability action -
• Manufacturing defect
• Design defect
• Deviation from manufacturing specifications
• Not conforming to express warranty
• Failing to contain adequate instructions for correct use
• Service provided-faulty, imperfect or deficient
CPA2019
Chapter 1- Preliminary, preamble and definitions
Chapter 2 - Consumer Protection Councils
Chapter 3 - Central Consumer Protection Authority
Chapter 4 - Consumer Disputes Redressal Commission
Chapter 5 – Mediation
Chapter 6 – Product Liability
Chapter 7 – Offences and Penalties
Chapter 8 - Misc
Rules and Regulations
Rules
• General Rules
• Central Consumer Protection Council Rules
• Consumer Disputes Redressal Commissions Rules
• Appointment of President & Member in State/District Commission Rules
• Mediation Rules
• Model Rules for States
• E-Commerce Rules
Regulations
• Consumer Commission Procedure Regulations
• Mediation Regulations
• Administrative control over State Commission & District Commission Regulations
Consumer-rights
To safeguard consumer interest, six consumer rights were initially
envisioned by consumer rights activists of the West, namely:

• Right to Safety
• Right to Information
• Right to Choice
• Right to be Heard
• Right to Redress
• Right to consumer education
Consumer rights – S. 2(9)
i. the right to be protected against the marketing of goods, products or services
which are hazardous to life and property; Safety
ii. the right to be informed about the quality, quantity, potency, purity, standard
and price of goods, products or services, as the case may be, so as to protect
the consumer against unfair trade practices; Information
iii. the right to be assured, wherever possible, access to a variety of goods,
products or services at competitive prices; Choice
iv. the right to be heard and to be assured that consumer's interests will receive
due consideration at appropriate fora; Heard
v. the right to seek redressal against unfair trade practice or restrictive trade
practices or unscrupulous exploitation of consumers; Heard and
vi. the right to consumer awareness Consumer education
Chapter II - Consumer Protection
Councils
• Consumer protection councils protect consumer rights at both the national and
state levels.
• Central Consumer Protection Council is an advisory body consisting of;
• Minister-in-charge of the Department of Consumer Affairs - chairperson, and
• Any number of official or non-official members representing necessary interests under the
Act.
• It may meet as and when necessary - minimum one meeting every year.
• State Consumer Protection Councils
• Minister-in-charge of the Consumer Affairs in the State Government - chairperson,
• Any number of official or non-official members representing necessary interests
• Center may appoint not less than ten members for the purposes of this Act.
• The State Councils must hold at least two meetings every year.
• District Consumer Protection Council
• Collector – Chairperson and other members
 III - Central Consumer Protection Authority
• CPA 2019 establishes the Central Consumer Protection Authority (CCPA) to promote,
protect and enforce rights of consumers.
• protect, promote and enforce rights of consumers as a class, and prevent violation of consumers
rights under this Act;
• prevent unfair trade practices and ensure that no person engages himself in unfair trade practices;
• ensure that no false or misleading advertisement is made of any goods or services which contravenes
the provisions of this Act or the rules or regulations made thereunder;
• ensure that no person takes part in the publication of any advertisement which is false or misleading.
• Can appoint various officers, experts etc., Empowers DMs to investigate complaints
• It is empowered to:
• Conduct investigations into violations of consumer rights and institute
complaints/prosecution.
• Order recall of unsafe goods and services.
• Order discontinuance of unfair trade practices and misleading advertisements.
• Impose penalties on manufacturers/endorsers/publishers of misleading advertisements.
For giving effect to the provisions of the Act, the following rules have been notified
and made effective from 20th July, 2020:

• The Consumer Protection (General) Rules, 2020

• The Consumer Protection (Central Consumer Protection Council) Rules, 2020.
• The Consumer Protection (Consumer Disputes Redressal Commissions) Rules, 2020.
• The Consumer Protection (Mediation) Rules, 2020.
• The Consumer Protection (Salary, allowances and conditions of service of President
and Members of the State Commission and District Commission) Model Rules,
2020.
• The Consumer Protection (Qualification for appointment, method of recruitment,
procedure of appointment, term of office, resignation and removal of the President
and members of the State Commission and District Commission) Rules, 2020.
• The Consumer Protection (E-Commerce) Rules, 2020. [effective from 23 July, 2020].
Consumer Disputes Redressal
Commission
• District Consumer Disputes Redressal Commission (District Commission) in each district.
Could be more
• Can entertain complaints within the local limits; value of the goods or services paid as consideration
does not exceed one crore rupees: A complainant can now file a complaint where he resides or works.
• Reference to mediation, after seeking consent of parties (5 days limit)
• Provision for review and appeal
• State Consumer Disputes Redressal Commission (State Commission)
• Complaints where the value of the goods or services paid as consideration one crore to ten crore
• Complaints against unfair contracts, where the value of goods or services paid as consideration does
not exceed ten crore rupees;
• Appeals against the orders of any District Commission within the State
• Provision for review and appeal
• National Consumer Disputes Redressal Commission (National Commission)
• Complaints exceeding ten crore, complaints against unfair contracts, value exceeds ten crore
• Appeals against the orders of any State Commission; and appeals against the orders of the Central
Authority;
• Next appeal to SC within 30 days
Mediation
• State Government to establish a consumer mediation cell to be attached to each of
the District Commissions and the State Commissions
• Central Government shall to establish a consumer mediation cell to be attached to the
National Commission and each of the regional Benches.
• Consumer mediation cell to consist of such persons as may be prescribed.
• To maintain—
a. a list of empanelled mediators;
b. a list of cases handled by the cell;
c. record of proceeding; and
d. any other information as may be specified by regulations.
• Duty of the mediator to disclose—
a. any personal, professional or financial interest in the outcome of the consumer dispute;
b. the circumstances which may give rise to a justifiable doubt as to his independence or
impartiality; and
c. such other facts as may be specified by regulations.
Consumer – 2(7)
Any person who
(i) buys any goods for a consideration which has been paid or promised or partly paid and partly
promised, or under any system of deferred payment and includes any user of such goods other
than the person who buys such goods for consideration paid or promised or partly paid or partly
promised, or under any system of deferred payment, when such use is made with the approval of
such person, but does not include a person who obtains such goods for resale or for any
commercial purpose; or
(ii) hires or avails of any service for a consideration which has been paid or promised or partly
paid and partly promised, or under any system of deferred payment and includes any beneficiary
of such service other than the person who hires or avails of the services for consideration paid or
promised, or partly paid and partly promised, or under any system of deferred payment, when
such services are availed of with the approval of the first mentioned person, but does not include
a person who avails of such service for any commercial purpose.
Explanation.—For the purposes of this clause,—
(a) the expression "commercial purpose" does not include use by a person of goods bought and
used by him exclusively for the purpose of earning his livelihood, by means of self-employment;
(b) the expressions "buys any goods" and "hires or avails any services" includes offline or online
transactions through electronic means or by teleshopping or direct selling or multi-level
Consumer
Any person who
• buys any goods for a consideration
• includes any user of such goods - with the approval of such person,
• does not include who obtains such goods for resale or for any commercial purpose; or
• hires or avails of any service for a consideration
• includes any beneficiary of such service with the approval of the first mentioned
person,
• does not include a person who avails of such service for any commercial purpose.
"commercial purpose" does not include use by a person of goods bought and used by
him exclusively for the purpose of earning his livelihood, by means of self-
employment;
"buys any goods" and "hires or avails any services" includes offline or online
transactions through electronic means or by teleshopping or direct selling or multi-level
marketing;
The intention of the legislature is to exclude big business houses carrying on
business with profit motive from the purview of the Act. At the same time it is
pertinent to save the inter­ests of small consumers who buy goods for self
employment to earn their livelihood, like a rickshaw puller buying rickshaw for self
employment, or a farmer purchasing fertilizer for his crops, or a taxi driver buying a
car to run it as a taxi, etc.
• Example : A was running a small type institute to earn his live­lihood. He purchased
a photocopy machine-canon NP 150. It proved defective. He sued the seller who
contended that A is not a consumer under the Act as he purchased the
photocopier for com­mercial use. The Commission held that by no stretch of
imagina­tion it can be said that the photocopier would bring large scale profits to A.
It was a part of his small scale enterprise. He was construed as consumer under
the Act.
• However, if such a buyer takes assistance of two or more persons to help him in
operating the vehicle or machine, etc., he does not cease to be a consumer.
• For the court to decide
• X buys a pressure cooker for his home
• Wife of X (Y) uses the pressure cooker
• X runs a small roadside eatery; buys a pressure cooker for cooking at his eatery
• X also works as a night guard in a residential society
• X runs a small type institute shop and buys a photocopy machine
• X runs a photocopy business and buys a photocopy machine
• X buys a car and runs it as a taxi
• He drives
• He drives, but occasionally his brother drives
• He hires a driver
• A goes to a doctor to get himself treated for a fracture.
• A landlord neglected and refused to provide the agreed amenities to his tenant.
He filed a complaint against the land­lord
• a Government official delays payment of PPF
Who is a not a consumer
• A person who obtains;
• goods free of charge
• who avails services free of charge
• who obtains goods for resale or for any commercial purposes
• who avails services for any commercial purposes
• who avails services under contract of service
 What are Goods and Services
• goods means every kind of movable property and includes "food" as
defined in clause (j) of sub-section (1) of section 3 of the Food Safety and
Standards
• spurious goods means such goods which are falsely claimed to be genuine;
• service means service of any description which is made available to
potential users and includes, but not limited to, the provision of facilities in
connection with banking, financing, insurance, transport, processing, supply
of electrical or other energy, telecom, boarding or lodging or both, housing
construction, entertainment, amusement or the purveying of news or other
information, but does not include the rendering of any service free of
charge or under a contract of personal service;
Service
• Service means any kind of service which is made available to the consumers
for their use for payment of consideration.
• The definition can be divided into three parts: descriptive part, inclusive
part and exclusionary part.
• The descriptive part says that service includes ‘any’ kind of service, which
has been availed by a potential consumer. This means that any and every
kind of service shall come within the definition.
• The inclusive part is the list of services that have been mentioned in the
statute. CPA, 2019 includes e-commerce as a new service under the statute.
The telecom sector was considered as a service and has now been explicitly
mentioned in the statute now.
• The exclusionary part is that part to determine those services whether
hired for free or not and for personal service or not.
Contract of Service and Contract for
Service
• Contract of Service – implies the relationship of master and servant
• Contract for Service – implies a contract where there is no master –
servant relationship
I M A v. V P Shantha, [AIR 1996 SC 550] the Court observed:
“It is no doubt true that the relationship between the doctor and a
patient carries with it certain degree of mutual confidence and trust
and therefore the services rendered by the doctor can be regarded as
service of personal nature but since there is no relationship of master
and servant between the doctor and the patient, the contract
between them cannot be treated as a contract of personal service but
a contract for service.
• Services free of cost and contract of personal service cannot be questioned
under the Act.
Product, product liability and product liability
action
• product means any article or goods or substance or raw material or any
extended cycle of such product, which may be in gaseous, liquid, or solid
state possessing intrinsic value which is capable of delivery either as wholly
assembled or as a component part and is produced for introduction to trade
or commerce, but does not include human tissues, blood, blood products
and organs;
• product liability means the responsibility of a product manufacturer or
product seller, of any product or service, to compensate for any harm
caused to a consumer by such defective product manufactured or sold or by
deficiency in services relating thereto;
• product liability action means a complaint filed by a person before a District
Commission or State Commission or National Commission, as the case may
be,for claiming compensation for the harm caused to him;
Harm and Injury
• harm in relation to a product liability, includes—
a. damage to any property, other than the product itself;
b. personal injury, illness or death;
c. mental agony or emotional distress attendant to personal injury or illness
or damage to property; or
d. any loss of consortium or services or other loss resulting from a harm
referred to in sub-clause (i) or sub-clause (ii) or sub-clause (iii),
but shall not include any harm caused to a product itself or any damage to the
property on account of breach of warranty conditions or any commercial or
economic loss, including any direct, incidental or consequential loss relating
thereto;
• injury means any harm whatever illegally caused to any person, in
body, mind or property;
Consumer of services
A person is a consumer of services if he satisfy the following criteria :
• Services are hired or availed of - The term ‘hired’ has not been defined under the
Act. Hired is to procure the use of services at a price. Thus the term ‘hire’ has also
been used in the sense of ‘avail’ or ‘use’. Accordingly it may be understood that
consumer means any person who avails or uses any service.
• A goes to a doctor to get himself treated for a frac­ture. Here A is hiring the services
of the doctor. Thus he is a consumer.
• What constitutes hiring has been an issue to be dealt with in many consumer
disputes. If it is established that a particular act constitutes hiring of service, the
transaction falls within the net of the Consumer Protection Act, and vice-versa.
• A landlord neglected and refused to provide the agreed amenities to his
tenant. He filed a complaint against the land­lord
• National Commission dismissed the complaint saying that it was a case of lease
of immovable property and not of hiring services of the landlord. [Smt. Laxmiben
Laxmichand Shah v. Smt. Sakerben Kanji Chandan [1992] 1 Comp. LJ 177 (NCDRC)] .
• A presented before the Sub-Registrar a document claim­ing it to be a
will for registration who sent it to the Collec­tor of Stamps for action.
The matter remain pending for about six years. ‘A’ filed a complaint
under CPA alleging harassment and prayed for compensation.
• Held ‘A’ not a “consumer” as there was no hiring of services by the
complainant for considera­tion and because a Government official
doing his duty as func­tionary of the State under law could not be said
to be rendering a service to the complainant. [S.P. Goel v. Collector of Stamps (1995)
III CPR 684 (SC)].

• When a person hires services, he may hire it for himself or for any
other person. In such cases the beneficiary (or user) of these services
is also a consumer.
• A takes his son B to a doctor for his treatment. Here A is hirer of services of
the doctor and B is beneficiary of these services. For the purpose of the Act,
both A and B are consumers.
Consideration must be paid or
payable
• However, its payment need not necessarily be immediate.
• The Direct and Indirect taxes paid to the State by a citizen is not
payment for the services rendered.
• paying property tax to the local corporation, who was responsible for
proper water supply. A consumer dispute over inadequacy of water
supply. National Commission held that it was not a consumer dispute
as water supply was made by the corporation out of its statutory duty
and not by virtue of payment of taxes.
 Consideration must be paid or payable

• H hiring an advocate with a promise to pay fee to the advocate after

settlement of the suit. ‘H’ is a consumer under the Act.
• Goes to a Doctor for treatment; Doctor being a friend charges
nothing. Not a consumer
• B issued an advertisement that a person could enter the contest by
booking a car. S purchased the car, enters the contest and was
declared winner; thus entitled to the two air tickets as promised in
the ad. Tickets were not given.
• Can B file a compliant under the CPA?
Commercial enterprise as a
consumer
• Buyer of goods for commercial purpose ceases to be a consumer
under the Act.
• If a commercial enterprise buys a cooler for its staff - is it a consumer
• Also, a consumer of service for commercial purpose remains a
consumer under the Act.
• S applied to Electricity Board for electricity connec­tion for a flour mill.
There was a delay in releasing the connec­tion. S made a complaint for
deficiency in service. He was held a consumer under the Act. –
Shamsher Khan v. Rajasthan State Elec­tricity Board (1993)
Defect and Deficiency
defect - any fault, imperfection or shortcoming in the quality, quantity,
potency, purity or standard which is required to be maintained or as is
claimed by the trader

deficiency means any fault, imperfection, shortcoming or inadequacy in

the quality, nature and manner of performance which is required to be
maintained in relation to any service and includes—
(i) any act of negligence or omission or commission by such person
which causes loss or injury to the consumer; and
(ii) deliberate withholding of relevant information by such person to the
consumer;
Some examples
• A Pressure Cooker burst and causes injury
• Failure to handover registration book along with a car purchased
• Test report showing soft drink not fit for human consumption
• Oil adulterated with toxic substances leading to paralysis
• Electric household appliances not in accord­ance with the standards
prescribed by ISI, being unsafe
• Gas Cylinder with excessive gas
• Development of cracks in walls and mosaic floor in a flat after taking
possession
• Colour of the marble changing
• Selling a stolen car (?)
“deficiency” in service
• Deficiency in service should occur during the happening of performance.
Thus it is crucial to determine when the performance of a service
commenced.
• Rly compartment in a bad shape
• A Homoeopathic practitioner treating under Allopathic system
• Promised to deliver a car within one month; not delivered even after
four months
• A contract for supply, erect and commission of a rolling mill. Mill is
supplied the mill, but not erected and commissioned (?)
• Negligence is failure to exercise due care. The ingredients are:
• The defendant owes a duty of care to the plaintiff.
• The defendant has breached this duty of care.
• The plaintiff has suffered an injury due to this breach.
Lucknow Development Authority v. M. K. Gupta
• CPA a milestone in the history of socio-economic legislation.
• Government bodies and Development Authorities developing / allotting lands and /
or constructing houses in discharge of their statutory functions are covered under
the Act.
• Complaints regarding use of substandard material or delay in delivery of houses /
flats amount to deficiency of service.
• When a citizen seeks to recover compensation from a public authority in respect of
injuries suffered by him for capricious exercise of power and the National
Commission finds it duly proved then it has a statutory obligation to award the
same. When the Court directs payment of damages or compensation against the
State the ultimate sufferer is the common man. It is the taxpayer’s money which is
paid for inaction of those who are entrusted under the Act to discharge their duties
in accordance with the law.
• Court ordered that amount of compensation of Rs. 10,000/- awarded by the
Commission for mental harassment shall be recovered from the salary of officers
who were negligent in handing over the possession of the plot of land.
Deficiency in service due to
circumstances beyond control
• In abnormal circumstances beyond the control of the person
performing service, provisions of the Act may not apply

• Failing to supply water for irrigation due to power grid failure of the
State; not liable for deficiency in service.

• However, negligence on the part of performer is not excused under

the cover of circumstances beyond control.
Medical negligence
• liability under the consumer protection act
• A deserving need for a two-pronged approach
• Identification of minimum reasonable standards in light of the
social, economical, and cultural context that would facilitate the
adjudicators to decide issues of professional liability on an
objective basis.
• These should enable the medical professionals to internalize such
standards in their day-to-day discharge of professional duties,
which would hopefully prevent to a large extent the scenario of
protection of patient's rights in a litigative atmosphere.
Spring Meadows Hospital vs. Harjot
Ahluwalia (1998) 4 SCC 39
• Patient (minor) admitted, given an injection, collapsed
• Can the parents be held to be consumers; so, as to claim compensation under the provisions of
the Consumer Protection Act?
• Is the commission under the Act is entitled to award compensation to the parents for mental
agony?
• Whether compensation can be awarded in favour of both the consumers; or compensation can
be awarded only to the beneficiary of the services rendered; who in the present case would be
a child who was admitted into the hospital?
• The National Consumer Disputes Redressal Commission held that since the resident doctor and
nurse were employees of the appellant hospital; the latter was Liable and awarded
compensation of Rs. 12.51 Lakh to the child and of Rs.5 lakh to the parents for acute mental
agony.
• SC dismissed the appeal - CPA a beneficial legislation intended to confer speedier remedy on
consumers, its provisions should receive a liberal construction
 'Unfair Trade Practice’ S. 2(47)
• A trade practice which adopts any unfair method or unfair or deceptive practice
• A false statement about standard, quality, quantity, grade, composition, style or model; or falsely
represents any re-built, second-hand, renovated, reconditioned or old goods as new goods;
• False declaration of sponsorship, approval, performance, characteristics, accessories, uses or benefits;
false or misleading representation concerning the need for, or the usefulness of, any goods or services;
• giving wrong warranty or guarantee of the performance, efficacy or length of life or materially misleads
concerning the price
• gives false or misleading facts disparaging the goods, services or trade of another person.
• permitting the publication of any misleading advertisement
• manufacturing or offering spurious goods for sale or adopting deceptive practices for providing service,
• not issuing proper cash memo or bill for the services rendered and the good sold,
• refusing to withdraw, take back or discontinue defective goods and services and refund the
consideration taken thereof within the time period stipulated in the bill or within 30 days if there is no
such provision in the bill,
• disclosing personal information of the consumer to any other person not in accordance with the
prevailing laws.
Restrictive trade practice – 2(41)
• A trade practice which tends to bring about manipulation of price or
its conditions of delivery or to affect flow of supplies in the market
relating to goods or services in such a manner as to impose on the
consumers unjustified costs or restrictions and shall include—
• delay beyond the period agreed to by a trader in supply of such goods
or in providing the services which has led or is likely to lead to rise in
the price;
• any trade practice which requires a consumer to buy, hire or avail of
any goods or, as the case may be, services as condition precedent for
buying, hiring or availing of other goods or services
• A gas distributor insisted his customers to buy gas stove as a condition
to give gas connection. It was held that it was a restrictive trade practice
• However, where there is no such precondition and the buyer is free to
take either product, no tying arrangement could be alleged even though
the seller may offer both the products as a single unit at a composite
price.
• A furniture dealer is selling Sofa at Rs. 20,000 and Bed at Rs. 15,000. He
has an offer that whoever will buy Sofa and Bed both, he will charge Rs.
30,000 only. Here the choice is open to the customer to buy the products
single or composite. This is not a restrictive trade practice.
The term ‘restrictive trade practice’ has a very wide meaning when read
in context of the MRTP Act, 1969 and Competition Act. However under
Consumer Protection Act, 1986, it has been used in a narrower sense
Unfair contract – 2(46)
• "Unfair contract" means a contract between a manufacturer or trader or service
provider on one hand, and a consumer on the other, having such terms which cause
significant change in the rights of such consumer, including the following, namely: —
a. requiring manifestly excessive security deposits to be given by a consumer for the
performance of contractual obligations; or
b. imposing any penalty on the consumer, for the breach of contract thereof which is
wholly disproportionate to the loss occurred due to such breach to the other party
to the contract; or
c. refusing to accept early repayment of debts on payment of applicable penalty; or
d. entitling a party to the contract to terminate such contract unilaterally, without
reasonable cause; or
e. permitting or has the effect of permitting one party to assign the contract to the
detriment of the other party who is a consumer, without his consent; or
f. imposing on the consumer any unreasonable charge, obligation or condition which
puts such consumer to disadvantage
Complaint
Any allegation in writing, made by a complainant for obtaining any relief provided by
or under this Act, that—
i. an unfair contract or unfair trade practice or a restrictive trade practice has been
adopted by any trader or service provider;
ii. the goods bought by him or agreed to be bought by him suffer from one or more
defects;
iii. the services hired or availed of or agreed to be hired or availed of by him suffer
from any deficiency;
iv. a trader or a service provider, as the case may be, has charged for the goods or
for the services mentioned in the complaint, a price in excess of the price—
a. fixed by or under any law for the time being in force; or
b. displayed on the goods or any package containing such goods; or
c. displayed on the price list exhibited by him by or under any law for the time being in force;
or
d. agreed between the parties;
Complaint
v. the goods, which are hazardous to life and safety when used, are being
offered for sale to the public—
a. in contravention of standards relating to safety of such goods as required
to be complied with, by or under any law for the time being in force;
b. where the trader knows that the goods so offered are unsafe to the
public;
vi. the services which are hazardous or likely to be hazardous to life and
safety of the public when used, are being offered by a person who provides
any service and who knows it to be injurious to life and safety;
vii. a claim for product liability action lies against the product manufacturer,
product seller or product service provider, as the case may be;
Who can be a complainant
complainant means—
i. a consumer; or
ii. any voluntary consumer association registered under any law for the
time being in force; or
iii. the Central Government or any State Government; or
iv. the Central Authority; or
v. one or more consumers, where there are numerous consumers
having the same interest; or
vi. in case of death of a consumer, his legal heir or legal representative;
or
vii. in case of a consumer being a minor, his parent or legal guardian;
Where the complaint can be filed –
S.35
• A complaint can be filed in a District Commission within the local
limits of whose jurisdiction the:

• Place of business or residence of opposite parties, or

• Place of business or residence of complainant, or
• where the cause of action, wholly or in part, arises
A complaint may be filed with a District Commission by—
• the consumer,— to whom such goods are sold or delivered or
agreed to be sold or delivered or such service is provided or
agreed to be provided; or who alleges unfair trade practice in
respect of such goods or service;
• any recognised consumer association
• one or more consumers, where there are numerous consumers
having the same interest, with the permission of the District
Commission, on behalf of, or for the benefit of, all consumers so
interested; or
• the Central Government, the Central Authority or the State
Government, as the case may be:
• Complaint may be filed electronically also.
• To be accompanied with prescribed fee
Time frame within which a complaint can be filed

• Section 69(1) of the Act provides that a consumer dispute can be filed
within two years from the date on which the cause of action arises.
• The point of time when cause of action arises is an important factor in
determining the time period available to file a com­plaint. There are
no set rules to decide such time. It depends on the facts and
circumstances of each case.
• These time frames are not absolute limita­tions. If the Consumer
Forum is satisfied that there was suffi­cient cause for not filing the
complaint within the prescribed period, it can entertain a complaint
beyond limitation time.
When a complaint cannot be filed
A complaint on behalf of the public which consists of unidentifiable
consumers cannot be filed under the Act.
• A complaint was filed on the basis of a newspaper report that
passengers travelling by a particular flight were made to stay at the
airport and the flight was delayed by 90 minutes causing great inconven­
ience to the passengers. It was held that such a general com­plaint
cannot be entertained. No passenger who boarded that plane came
forward or authorised the complainant to make the complaint - Consumer
Education and Research Society, Ahmedabad v. Indian Airlines Corporation
• A complaint by an individual on behalf of general public is not permitted
- Commissioner of Transport v. Y.R. Grover 1994 (1) CPJ 199 NC.
• An unregistered association cannot file a complaint under the Act.
Relief to the complainant – S.39
If the complaint is proved the forum shall order

• to remove defect pointed out by the appropriate laboratory from the goods in
question;
• to replace the goods with new goods of similar description which shall be free
from any defect;
• to return to the complainant the price, or , as the case may be, the charges
paid by the complainant;
• to pay such amount as may be awarded by it as compensation to the
consumer for any loss or injury suffered by the consumer due to negligence of
the opposite party;
• To remove the defect in goods or deficiency in the services in question.
Relief to the complainant
• to discontinue the unfair trade practice or the restrictive trade practice or not to
repeat them;
• not to offer hazardous goods for sale;
• to withdraw the hazardous goods from being offered for sale;
• to cease manufacture of hazardous goods and to desist from offering services
which are hazardous in nature;
• to pay such sum as may be determined by it, if it is of the opinion that loss or
injury has been suffered by a large number of consumers who are not identifiable
conveniently.
• to issue corrective advertisements to neutralize the effect of misleading
advertisement at the cost of the opposite party responsible for issuing such
misleading advertisement;
• To provide for adequate cost to parties.
Appeal – S.73
• Shall be filed within thirty days.

• Delay in filing appeal may be condoned if there is sufficient cause.

Misleading advertisement – 2(28)
• Misleading advertisement" in relation to any product or service, means an
advertisement, which—
a. falsely describes such product or service; or
b. gives a false guarantee to, or is likely to mislead the consumers as to the
nature, substance, quantity or quality of such product or service; or
c. conveys an express or implied representation which, if made by the
manufacturer or seller or service provider thereof, would constitute an
unfair trade practice; or
d. deliberately conceals important information

• Manufacturers, advertising agencies, celebrity endorsers and publishers can

be made liable for a misleading advertisement
 Misleading Advertisements
What is a misleading advertisement?
• Any advertisement or promotion through Television, Radio, or any other electronic media, Newspapers, Banners,
Posters, Handbills, wall-writing etc. to misrepresent the nature, characteristics, qualities or geographic origin of goods,
services or commercial activities so as to mislead the consumer could be broadly defined as a misleading advertisement.
What do i do as a consumer when i see such advertisements?
• You can register a complaint along with a copy / video / audio of such advertisement through the web portal of the GOI
at http://gama.gov.in to bring it to the notice of the Government.
How do i register my complaint?
• A onetime registration is required for lodging a complaint. For registration, go to the web portal http://gama.gov.in and
click on the login link and register yourself, verify through your email / mobile and create userid and password.
• Using this userid and password, enter into the portal and fill in required details attaching necessary audio / video / paper
clip / photograph ( if available).
How do i track the status of my complaint?
• Log in using user id and password and you can track the status.
What action do i expect on my complaint?
• Your complaint will be forwarded to the concerned authority for action against the misleading advertisement.
Who are the authorities?
• The Government Departments / Self-regulating Authorities / Ombudsmen are the authorities.
Conditions for bait advertisements
Advertisement that offers goods, products, or services for sale at a low price to
attract customers.

• it should not encourage consumers to buy goods, products, or services without a

reasonable prospect of selling them at the advertised price;
• the advertiser should ensure adequate supply of goods, products, or services to
meet the expected demand created by the advertisement;
• the advertisement should mention the reasonable grounds for any anticipated
failure to supply the goods, products, or services;
• the advertisement should not mislead consumers by omitting restrictions, such as
geographic or age restrictions, on the availability of goods, products, or services; and
• the advertisement should not mislead consumers about market conditions
concerning the goods, products, or services or their availability to encourage
consumers to purchase such items in less favourable conditions.
Surrogate advertising
The Guidelines provide a definition for surrogate advertisement, which
refers to the advertising of goods and services that are otherwise
restricted or prohibited from being advertised under Indian law. The
Guidelines state that surrogate advertising is not allowed if:

• it directly or indirectly refers to goods or services that are prohibited

or restricted from being advertised; or
• it is using the brand name or logo of any goods or services whose
advertisement is prohibited or restricted under the law.
Free claims advertisements
• Advertisements that make claims of goods or services being ‘free of cost’, ‘without
any charge’, or similar terms must not require the consumer to pay anything other
than the unavoidable cost of responding to such advertisements and collecting or
paying for the delivery of the said goods or services.

• An advertiser promoting an IT-based service cannot use the term ‘free trial’ if the
consumer has to provide credit card information and will be charged if they do not
cancel the trial before the end of the free trial period. Similarly, an advertisement for
a cloud storage solution cannot claim to offer a ‘free trial’ if the consumer has to pay
a non-refundable fee to use the service.

• Using the term ‘free trial’ in such instances is likely to deceive the consumer into
believing that the service is completely free when there are hidden costs or
conditions involved.
Advertisement targeting children
• Advertisements targeted towards children require special attention and responsibility as children
are vulnerable and easily influenced.

Endorsement
• The Guidelines state that the endorsement in an advertisement must reflect the genuine and
reasonably current opinion of the endorser, must be based on adequate information and should not
be deceptive. The Guidelines also prohibit Indian as well as foreign professionals from endorsing
such professions that are not permitted or are illegal to be advertised under Indian law.

Disclaimers in Advertisements
• The Guidelines outline the requirements for complying with disclaimers in advertisements. A
disclaimer may expand, clarify or resolve ambiguities in a claim but must not contradict the material
claim or the main message of the advertisement. It must not hide material information that could
make the advertisement deceptive or obscure its commercial intent. The language used, font,
placement, speed of the voice-over, and legibility of disclaimers should be the same as the claim
and visible to everyone viewing it.
Celebrity Endorsement
• Celebrity endorsement, also known as celebrity branding or celebrity
advertising is a marketing strategy that uses a celebrity's fame and
image to promote a brand or product.
• The Act fixes liability on endorsers
• It provides for penalties for misleading advertisements made by
endorsers. S. 21; the Central Authority may order
discontinuation/modification of a misleading/false advertisement
which is prejudicial to the interest of the consumer or in
contravention with the consumer rights.
• The Central Authority may also impose a penalty on the endorser of
the false or misleading advertisement
Who should be sued by a consumer
- manufacturer or seller
A consumer finding defect in the goods will sue the person from whom
he bought the goods. Reason being privity of contract.

• If the defect is a manufacturing defect, the consumer may sue the

manufacturer also along with the seller. This is an option with the
consumer. Thus the manufacturer is a possible party, and not a
necessary party.
• A was manufacturer of “X” brand cars and B was a dealer for them. C
bought a car from B and found it defective. Here he may sue B alone,
or A and B both.
"product" means any article or goods or substance or raw material or any
extended cycle of such product, which may be in gaseous, liquid, or solid
state possessing intrinsic value which is capable of delivery either as wholly
assembled or as a component part and is produced for introduction to trade
or commerce, but does not include human tissues etc;
"product liability" means the responsibility of a product manufacturer or
seller, of any product or service, to compensate for any harm caused to a
consumer by such defective product manufactured or sold or by deficiency
in services relating thereto;
"product liability action" means a complaint filed by a person before a
District Commission or State Commission or National Commission, as the
case may be, for claiming compensation for the harm caused to him;
Liability of product manufacturer
• A product manufacturer will be held liable in a product liability action
under the following circumstances:
• The product contains manufacturing defects.
• The product is defective.
• There is a deviation from manufacturing specifications.
• The product does not conform to the express warranty.
• The product fails to contain adequate information for proper usage.
Liability of product service provider
• A product service provider will be held liable in a product liability action
under the following circumstances:

• The service provider will be responsible when the service provided by

them is faulty or imperfect.
• There was an act of negligence on their part.
• The service provider failed to issue adequate instructions and warnings
for the services.
• The service provider failed to conform to the express warranty or terms
and conditions of the contract.
Liability of product seller
• A product seller will be held liable in a product liability action under
the following circumstances:

• They altered or modified the product which resulted in being

detrimental to the consumer.
• They failed to exercise reasonable care in assembling, inspecting or
maintaining such product
• They exercised substantial control over the product which resulted in
causing harm to the consumer.
Exceptions to product liability
• There are certain exceptions to product liability action mentioned in
Section 87 of the Act, such as;

• The product was altered, modified or misused by the consumer,

• A consumer cannot bring product liability action when the
manufacturer has given adequate warnings and instructions for the
use of the product,
• The manufacturer would not be liable in case of a product liability
action for not warning about any danger that is commonly known to
the general public.
Offences and penalties under CPA
• Punishment for false and misleading advertisements: S 89 - promoting false or
misleading advertisements punishable with imprisonment up to two years and with
fine up to ten lakh rupees.
• Punishment for manufacturing, selling, distributing products containing adulterants:
S 90 selling, manufacturing, distributing products containing adulterants;
• Not causing any injury - imprisonment up to six months and fine which may extend to one
lakh rupees,
• Causes injury not amounting to grievous hurt - imprisonment up to one year and fine up to
three lakh,
• Causes injury amounting to grievous hurt - imprisonment up to 7 years and fine up to 5 lakh,
• Causing death – imprisonment seven years which may extend to life imprisonment and fine
not less than ten lakh rupees.
• Punishment for manufacturing, selling, and distributing spurious products: Section
91 states that any person who sells, manufactures, or distributes spurious products
shall be punished for such acts.